The Calgary City skyline peeks out from behind houses in the NE community of Saddle Ridge. Stuart Dryden/Calgary Sun/QMI Agency

Awhile back, I saw a comment posted on Twitter by Mike Morrison, a Calgarian who wrote, “I’m no doctor, engineer or whatever, but if home builders are complaining about slumping sales, maybe they should, um, I don’t know, stop building new neighbourhoods and continue to develop the ones they already have?”

Morrison was responding to a post by The Sprawl, an online news portal that had posted a comment about Calgary city council approving 14 new suburban communities last July, or as The Sprawl said, “in the dog days of summer,” apparently implying council snuck the approvals through at a time when few Calgarians would notice.

Or fewer urban activists would notice.

Mr. Morrison acknowledges not being a “doctor, engineer or whatever”, which have nothing to do with home building, but having a firm grasp of the demand/supply equation does.

To get a grasp of the latter, and why new communities are a good thing, he need only look at Vancouver and Toronto.

These cities have the highest home prices, not just in Canada, but also when compared to other major cities in North America.

The Toronto and Vancouver housing markets are why the B20 stress test was introduced, subsequently weakening all housing markets in Canada – markets that didn’t need cooling, markets that were already losing steam, in particular, Calgary.

The average single-family home price in Toronto and Vancouver is north of $1 million.

Because. They. Have. No. New. Neighbourhoods.

No new neighbourhoods makes land extremely expensive because supply is low, if not non-existent. In Calgary, there is no new land in older neighbourhoods, so new homes, whether they are single-family or multi-family, in those areas are much more expensive.

Speaking of multi-family homes, they are taking an increasingly larger share of sales in Calgary.

Altus Group, which measures and reports on multi-family home markets in Canada, says, in its (ital) 2018 New Homes Trends report (ital), which covers the first three quarters of 2018, sales of multi-family homes were just shy of 2,500 units, up from 2,200 to the end of third quarter of 2017.

And, I’m sure, much to the chagrin of urban activists, the growth in sales was entirely in Calgary’s new communities in the suburbs, says Matthew Boukall, vice-president, Data Solutions at Altus Group.

“We are seeing all of that growth in the peripheral regions. In the downtown, the inner-city market, the infill buildings, sales are actually down year over year,” says Boukall. “Last year, we saw a lot of new projects launched and part of that is coming with all the new communities approved by council last year and in recent years. Those communities – Livingston, Carrington (in the north), we’re now seeing projects down in Yorkville (in the south) – all are being developed and there are new multi-family developments coming to those new communities.”

These new communities are being developed with new ideas and designs that weren’t employed when old communities were new – amenities such as LRT, activity centres, employment opportunities, shopping and services are included from the get-go in some or just a couple of years away (rather than a decade) in others.

They also include better affordability, says Boukall.

“Price and affordability are certainly a part of it. Wood-frame buildings in the suburbs are, in many cases, half the price of a downtown condo in a concrete high rise or for a comparable size,” he says, adding there may be a shifting market at work, as well. “The one thing we do know in Calgary is the downtown office market remains poor. There’s high vacancy with relatively little absorption of office space and little employment growth.

“Most of Calgary’s employment growth has been in peripheral regions and the sectors of the economy that are growing don’t need downtown office space. (Those sectors are) manufacturing, distribution, a lot of entrepreneurial opportunities, where home-based businesses or people working at a small office in industrial areas are where we’re seeing the growth.”

It’s added a level of stability to the new multi-family homes market.

“There’s still some pain to go through in the resale market. When you look at the resale market, you’re dealing with a fixed asset in a market that may not be where the growth is happening,” says Boukall. “You go down to Seton, there’s job growth, there’s employment growth, there’s retail growth. Seton is one of the bright spots in the market. Look at Yorkville, look at Legacy – they’re not connected to the LRT but they’re pretty close and that’s where jobs are.

“The advantage builders have is they can build to the current market demands, not the demands that existed back in 2007 when the resale units were built and they can build based on market conditions.”

The other thing about new communities many urban activists may not know is new home buyers pay all the costs of required infrastructure, including off-site infrastructure. Those communities also add to Calgary’s revenues.

I would expound on that further, but I can see the bottom of the page from here, so I’ll wrap this up.

I have nothing against urban activists and I encourage them to continue to enjoy living high-density, inner-city lifestyles.

There are two sides to the lifestyle coin – not everyone wants to live in older neighbourhoods, so please respect those who choose to live and build in the ‘burbs.

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